Every year, millions of young people around the world complete an apprenticeship in order to gain the skills they need to get a high-paying job. Yet few Americans have ever heard of a modern apprenticeship. For example, while 500,000 young Brits started apprenticeship programs in 2012, only 100,000 Americans did the same. Senators Cory Booker (D-NJ) and Tim Scott (R-SC) want to change that. Their new bill, called the LEAP Act, would boost apprenticeships by providing businesses with a $1,000 tax credit for each apprentice they hire ($1,500 for apprentices under the age of 25). They introduced the bill on Wednesday.
Apprenticeships offer substantial benefits to both workers and businesses, which is why we have advocated for a large-scale expansion of apprenticeships in the U.S. An apprenticeship is a job in which the worker is paid to learn a set of skills through on-the-job training. Unlike an internship—in which the intern works for little or no money and rarely receives formal training—an apprenticeship follows an earn-while-you-learn model and leads to a nationally recognized credential that recipients can take anywhere in the country.
Research has shown that workers who complete an apprenticeship earn about $300,000 more than comparable job seekers in their lifetimes. Moreover, apprentices gain an education, often leading to an associate’s degree, with little or no educational debt – an appealing prospect for young people facing skyrocketing college costs and record-high student debt levels. Employers who sponsor apprentices gain a pipeline of skilled workers, reduce employee turnover, and boost productivity.
So why are there relatively few apprenticeships here in the U.S.? We found the biggest challenge to broader adoption of apprenticeships is that businesses are either not aware of them or they have significant misperceptions about them. And, unlike in other countries, businesses that sponsor apprentices in the U.S. receive no federal assistance. To combat that, we recommended investing in a major marketing campaign to better inform businesses about how apprenticeships could help their bottom line and creating a $1,000 federal tax credit to help defray businesses’ costs in offering them- exactly what Booker and Scott would do with their new bill.
Enacting the LEAP Act will create a new incentive for businesses to hire apprentices by helping them offset some of the training costs. Since introducing a similar tax credit in 2007, South Carolina has seen a nearly six-fold increase in the number of employers in the state sponsoring apprenticeships.